Do you even worry about stables taking down the markets?

Hello, LBIers. Something I have been thinking about lately has been "Could stable tokens bring down the crypto markets?" How many stable token projects are actually filled backed 1-1 with a US dollar and how many are no better than printing presses. The reason I worry about this is that if something like Tether were to ever go busto, the ripple effects on the crypto market would be comparable to a tsunami wrecking everything within the space.

Most stable tokens are what they call "soft pegged" which is a soft way to say, not pegged. They are maybe partly backed by some USD or a basket of other cryptos. Soft pegged to me sounds we, "we have some of the money but not all of it". That worries me because we are entering a bear market and if some of these tokens are backed back crypto, their values are about to decrease.

There are a few stable projects that are fully backed, HUSD, PAX DOLLAR, TRUEUSD, Gemini dollar and USD coin. We can be thankful that USDC is fully backed with it being the second biggest stable token by market cap.

We've all seen what happened with Terra and TerraUSD recently and it could happen again. Stables are incredibly important to the crypto ecosystem and they are the gates between the real world and crypto. I worry about a project like Tether going busto because we all know it's not backed and they issue them from thin air. The government have targeted them before and it'll happen again as their market caps are huge and rival that of some small countries. What would $70 billion being wiped off the market do to the markets? we already see Tether dominance decline as others compete for market share within the space and I feel it's a ticking time bomb waiting to implode. I know lots of people have been saying this for years already but Tether is gonna boom someday and it's going to be a bad day for crypto. I hope it lasts long enough to become a small player in the stable token game and when it does finally implode its ripples will be almost nothing. Could Tether bring down the markets? temporary, yes.

Isn't it funny that even the crypto markets are dependent on the US dollar? Everything is priced in dollars, if crypto was pure, it would be priced in something like BTC and Satoshis. With the war in Ukraine and the recent stock market crash, it's hard to guess what is going to happen with the US dollar short to medium term. Inflation is increasing and the central banks are putting the brakes on the money printers and increasing interest rates which will make mortgages on overvalued homes more expensive to pay off. This is a recipe for reduced spending power, less production, increased unemployment and in general bad times. How all of this action plays on the US dollar, I have no idea but I do worry about the future of alot of stable token projects that are backed by an algorithm or nothing going busto.

What is HBD?

Well, sadly HBD is not a backed token. It is backed but it's not at the same time. It's not backed by 1 US dollar but instead $1 worth of HIVE. HBD is however fully decentralized which is a huge advantage because you own it when you hold it in your HIVE wallet. Its price is normally under $1 and floats in the range of $0.95-0.99 but it'll always return to $1 and sometimes go higher every few weeks. It's been like this for years and HBD is as stable as say 95 cents to $1.03. When we factor in you can earn 20% from saving HBD, you can clear out any price virance with 6 months of savings interest.

What if Leofinance released a stable token?
Why not? I think stable tokens are the most profitable way to make money in the crypto game. LeoFinance has the community, the devs and the resources to make something let could be amazing and they could integrate it into their farms, and lending platform and get it added to HIVE games and dapps. They could back them with actual US dollars, build use cases for them and earn a fortune in interest payments. In my simple mind, you issue say 1 million stable tokens for 1 million dollars. You stake more than $1 million on some defi platform and earn 10-20% from it. If you can build use cases for the stable token and they are locked up, your gonna earn $100-200k per year. It's probally not as simple as that but I dont think it would be far off. They could even feed a percentage of the interest earned and have an over peg stable token where the price slowly increases over time. That would be something amazing and not that hard to do.

Think if Tether actually had 70 billion earning even 5% per year, that would be 3.5 billion for doing nothing other than providing liquidity in and out of the markets.

What do you think? Have you ever thought about stable tokens and what impact they could have on the markets? This is something that worries me and it's always in the back of my head that we will have a "black swan" event connected to a stable token. I know Terra just helped to crash the market but I think of Terra as the spark and not the reason for the recent crash.

Im sure alot of us hold stable tokens so it would interesting to see your thoughts in the comments below.

Thanks for taking the time to read through today's post, I hope you found it entertaining and gave you something to think about. Have a great day folks :)